In a ruling, a U.S. district judge sided with UnitedHealth, which argued that the rule requiring Medicare Advantage (MA) plans to return overpayments based on an analysist of its members’ health status was inconsistent with Medicare fee-for-service requirements, FierceHealthcare reported. This would vacate CMS’ 2014 final rule on overpayments.

UnitedHealth sued CMS in 2016 over this issue, arguing that the rule imposed a stricter standard on MA carriers than on CMS itself when paying Medicare benefits, HealthLeaders Media reported.

Stephanie Trunk, healthcare practice co-leader at Arent Fox, based in Washington, D.C., told HealthLeaders Media that the ruling concluded that CMS’ final rule had two major issues, leading to its downfall:

It was contrary to the statutory requirement of actuarial equivalence between traditional Medicare and MA.

The intent standard associated with “identifying” an overpayment adopted in the final rule was not as proposed in the proposed rule and heightened in comparison to the statue.

The basis for that case is that UnitedHealth failed to return identified overpayments as required by the Affordable Care Act (ACA), as it failed to delete invalidate diagnosis codes and return the risk adjustment payments associated with the higher weighted codes. This is based on the interpretation of the ACA overpayments obligation in the 2014 final rule, which the court just invalidated.

UnitedHealth spokesman Matt Burns praised the ruling to HealthLeaders Media, saying that it “sets an important precedent and affirms the government must apply its actuarial standards equally to Medicare Advantage plans and fee-for-service Medicare.”

Editor’s note: To read FierceHealthcare’s coverage of this story, click here. To read HealthLeaders Media’s coverage, click here. To read more of Fox’s thoughts on the ruling, click here. To read the judge’s ruling, click here.